Real Estate Regulation Act (RERA): What You Need to Know?

What is RERA?

The RERA or Real Estate Regulation Authority Act of 2016 is an Indian legislation that has had a vital impact on the real estate industry of India. Its main objective is to protect homebuyers and boost developments in the real estate industry. This act basically equips every state with a RERA for the proper administration of the real estate sector. 

This act ensures transparency, accountability and efficiency in the sale of any and all real estate projects. It also built an adjudicating mechanism to address disputes more efficiently, complete with an Appellate Tribunal.  Essentially, the purchaser’s interests are protected through this act, making it highly relevant to the development of real estate in India. 

To ensure transparency the developers are required to lay out all information about their project, like land and delivery details, construction specifics and approvals. The act makes it possible for homebuyers to express their grievances as well, ensuring honesty and efficiency in the investments made in real estate. It has also helped in actively avoiding the spread of misinformation or misleading of buyers by developers through these regulations. 

Understanding the RERA Act

The definition clause under Section 2 of the Act enlists the meaning of multiple terms used throughout the Act. It also outlines the registration policy for real estate projects and agents, making it mandatory for all projects to register with RERA for launching a project to provide greater transparency in project marketing and execution.

The act is detailed and comprehensible, with the definition clause under Section 2 that states the meanings of all terms used in the Act. IThe registration policy that it  states makes it compulsory for all projects to be RERA-certified, so that there is complete transparency between agents or developers and the buyers. 

This eliminates any unnecessary waste of time for investors, helping them make sure that the project they are choosing is right for them and not misleading in any way.

The establishment of a regulatory authority in every Indian state is essential to ensure the effective implementation of the Real Estate (Regulation and Development) Act, 2016 (RERA). The authority plays a crucial role in overseeing the real estate sector, guaranteeing that:

1. Proper Implementation: The enforcement of the Act is carried out uniformly across the country. Care is taken to ensure that all projects in real estate are registered with RERA before being advertised or sold. What this essentially does is make sure that the developers of a project are not selling properties that can put the buyer at a potential risk in the future, and also ensuring the buyer’s trust in their investment. This makes the entire process a lot more transparent, which helps boost the progress of the real estate industry. 
2. Transparent Disclosure: Developers are basically required by law to provide detailed and accurate information about their project, including the specifics of the layout, the plan, the amenities and the safety and security guaranteed. This generally helps buyers in having a deeper understanding of the project, as well as helping them avoid wasting time on choices that are not the right fit for them. As for developers, this completely eliminates the risk of false advertising. The accountability of the project is thus essentially backed by law. 
3. Escrow Account Management: An escrow account is basically a trust account where funds are held in trust while two or more parties make a transaction. The process involves the funds being deposited in a safe place while the transaction occurs, after the completion of which the funds are released to the seller. This makes for a more transparent and efficient way of payment, ensuring that there are no fraudulent activities being undertaken by either party. This safeguards funds collected from the homebuyers, guaranteeing that their money is only used in development of the intended project and not for any irrelevant activities. 
4. Standardised Marketing: The RERA-defined carpet area refers to the area of the the area of the property that is actually usable which includes the carpet area, walls, common areas and balconies. This is extremely important in deciding the expenses of a property, all cost-based decisions are taken on the basis of this area. The Built-up area includes staircases and lifts, and is slightly more than the carpet area, while the Super Built Up Area includes the Built Up Area as well as other common areas. It is on the basis of the Super Built Up Area that the cost of the property is calculated.  It is probably advisable to take into consideration the usable carpet area for the home buyer. While important in approvals, the term “enclosed balcony” is excluded under the RERA carpet definition. So it would be better to check the usable carpet area to get a better idea of the true space being provided to you.
5. Timely Completion: Projects are completed and delivered as scheduled, with the regulatory authority monitoring progress and enforcing penalties for delays or non-compliance. This is probably the most important feature of the provisions of RERA. The regulating authority monitors all progress as well as enforces penalties in case of delays with compliance or non-compliance of demands. This makes sure that no promises by the developers go unanswered, ensuring complete accountability and timely delivery and possession of the buyer. 

What Happens in case of non-compliance?

Along with the obvious benefits of the RERA act, non-compliance with RERA can also lead to consequences. These include harsh fines, imprisonment, fines, revocation of registration, and compensation for homeowners who incur damages due to the developer’s failure to comply with the legislation.

This is a strict implementation of the legislation. Non-compliance with the RERA act can lead to the imposition of harsh fines, revoking of registration, and even imprisonment – with compulsory compensation to homeowners who suffer any damages from the developer’s inability to abide by the provisions of the act.

If a promoter fails to register with RERA, they may face penalties that are 10% of the estimated project cost. It can also lead to imprisonment of up to 3 years. 

The act requires real estate agents to take registration before the selling or buying of properties, and have a single registration number issued for each State or Union Territory. If the agent fails in complying with registration of sections 9 and 10, they are held accountable and may face penalties of up to Rs 10,000 every day, which cam also extend up to 5% of the cost of the project or property. 

How Effective has it Been?

The RERA and Appellate Tribunal essentially impose the surveillance of state-level authorities that will oversee transactions. They will ensure the timely completion and scheduled delivery of both commercial and residential projects, so that there is no issue regarding the trust and transparency between developers and buyers. 

Furthermore, Appellate Tribunals are now capable of adjudicating cases within 60 days, and the Regulatory Authorities can work through complaints within the same time. Although this act has had some controversial opinions in the developer circles, it has had a very positive net effect on the real estate sector. 

Real estate with the help of RERA has gone through dramatic transformations that have made the entire process more approachable, friendly and trustworthy for buyers and developers alike. Regardless, it still has certain complaints about causing delays in project approvals and expensive compliance costs. 

Thus, as we can more or less be certain of, the RERA has been vital in completely changing the face of the real-estate  industry. It promotes transparency, assures accountability and guarantees efficiency. The regulatory superstructure that it has provided ensures the protection of the homebuyers’ rights and interests, the on-schedule delivery and finishing of projects, and absolute fairness in business transactions that are carried out between developers, builders and agents.